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Cummins Shares Plans for Profitable Growth With Investment Community

Senior leaders of Cummins Inc. Tuesday shared their five-year plans for profitable growth, emphasizing the opportunities presented by tightening emissions regulations in many parts of the world, the acquisition of its distributors in North America and highlighting the roll-out of a broad range of exciting new products.

Speaking at a meeting with more than 100 Wall Street analysts and shareholders, Cummins Chairman and Chief Executive Officer Tom Linebarger, Chief Financial Officer Pat Ward and other executives discussed opportunities for all four of the company's operating segments.

Cummins expects to grow revenues at two to three times the rate of growth in global GDP and laid out its targets for revenues and profitability in 2018 under two different economic scenarios to reflect the uncertain economic conditions ahead.

Assuming a higher growth environment in the global economy, the company expects to deliver revenues of $31 billion and earnings before interest and taxes (EBIT) of 18% in 2018 and achieve return on equity above 25%.

The company said that in an environment of lower global growth, it expects to deliver revenues of $25 billion and EBIT of 16% in 2018 resulting in return on equity above 20%.

For the engine segment, the company expects revenue of $12 billion to $13 billion in 2015 and EBIT of 12% to 13%. By 2018, the guidance is for $15 billion to $17.5 billion in revenue and 13.5% to 15% EBIT, said Rich Freeland, president of Cummins' Engine Business. He also pointed to an expanding product portfolio, including the 15-liter ISX15G natural gas engine due out in 2016.

Among the key macroeconomic and industry trends that are driving growth opportunities for Cummins, Linebarger said, are:

globalization

emissions standards

infrastucture growth

price and availability of energy

The company is investing in attractive markets, expanding distribution to capture more aftermarket, capturing the benefits of higher volumes as markets improve, and a "relentless focus on cost."

Linebarger and other company leaders covered a number important topics including:

investments in new products that will help Cummins continue to strengthen its competitive advantage and capitalize on these key growth trends;

plans to acquire the North America distribution businesses; and

continued focus on profitable growth to drive long-term shareholder value.

"We are confident in our plans to grow faster than the end markets we serve," said Linebarger.